Best Debt Consolidation Loans in 2026

How Debt Consolidation Works

Apply for a personal loan equal to your total debt. Once approved, use the funds to pay off your credit cards and other debts. You now have one loan with one monthly payment at a lower interest rate. Most borrowers save $2,000–$5,000+ in interest over the life of the loan.

Debt Consolidation Example

$15,000 across 3 credit cards at 22% average APR = $3,300/year in interest. Consolidated into a personal loan at 10% APR = $1,500/year in interest. Annual savings: $1,800. Over 3 years: $5,400 saved.

What Debts Can You Consolidate?

Credit card balances. Medical bills. Store credit cards. Payday loans. Personal debts. Student loans (in some cases). Any unsecured debt with a higher interest rate than the consolidation loan.

Debt Consolidation vs. Balance Transfer

Balance transfer cards offer 0% intro APR for 12-21 months — great if you can pay off the balance in time. Personal loans offer fixed rates for 2-7 years — better for larger amounts that need more time to pay off. For debt over $10,000, a personal loan is usually the better choice.

Frequently Asked Questions

Does debt consolidation hurt your credit?

Short-term: a small dip from the hard inquiry. Long-term: your score typically improves because you’re reducing credit utilization and making consistent on-time payments.

What credit score do I need?

Upgrade accepts 580+. For the best rates (under 10%), aim for 720+. Even with fair credit (620-669), you’ll likely get a rate lower than your credit card APR.

How much can I consolidate?

SoFi and LightStream offer up to $100,000. Most debt consolidation needs ($5,000–$35,000) are well within range of all major lenders.